Trade & Industry Advisory
29 April 2020 • 8 min read
The Digital Supply Chain: Benefits for Shipping
By introducing advanced technology in the supply chain cycle at various crucial stages, work has become efficient and cost effective.
Supply chain has seen
tremendous transformation in the last decade. A lot of this transformation can
be credited to digitization. By introducing advanced technology in
the supply chain cycle at various crucial stages, work has become efficient and
Digitization and The Shipping Industry Supply Chain
Sea transport accounts for 90% of the trade. Shipping is complex in nature. The industry suffered greatly due to the global financial crisis of 2008. It is still playing catch up. The established way of managing the industry supply chain does not seem to be profitable anymore. Understanding the need for change and to reinvent itself, the shipping industry has started to open its doors to digital disruption. It is now working towards creating a digital supply chain.
A global survey titled “Competitive Gain in the Ocean Supply Chain: Innovation That’s Driving Maritime Operational Transformation”, conducted by Cargotec’s Business Performance Innovation (BPI) Network and Navis and XVELA, highlights the industry’s changing attitude towards digital.
The respondents - who are in some capacity or the other related to the shipping industry, pointed out the areas which need improvement and can benefit from use of better technology. According to the survey, the five areas that the industry needs to work on are - carrier to terminal coordination, supply chain visibility and information sharing, terminal operations, cargo flow visibility and predictability, and coordination across carrier alliances.
Some of these issues are being addressed.
For example, earlier, once shippers had handed over their shipment to the shipping line, tracking its location was not easy. At most, they could get an update from the shipping line on the location of their shipment when the ship called at a port. But now, advanced technology has made it possible for them to get real-time information through a container GPS tracking system on the location of their shipment. They can track the shipment on their own.
Process automation is another area that shipping lines are exploring. Inventory management across locations and providing freight quotes and shipment booking online are some of the processes that are going digital.
The industry has also caught the fancy of the global start up world. There are start ups that are working on managing documentation, offering freight comparison, integrating different modes of transport, and aiding customs clearance.
While changes are being implemented, digital adoption is slow and it is not yet uniform across the industry and does not provide a common platform for all the parties involved.
Will Digitization be Beneficial for the Trade?
Mostly, yes. It will provide a solution for some problems and may not help address some others. There are doubts that digitization will not help resolve two of the main pain points of the industry – supply demand imbalance and optimum vessel utilization. But, other simpler processes and issues do stand a chance to improve with digitization.
According to a report by Accenture, if the industry can “standardize” its systems and processes, it will be able to create an online value proposition for its customers. This standardization coupled with digitization has many benefits for both the customer and the shipping lines. Some of the main benefits of going digital are:
1. Time and Transparency: A digitized process has to be standardized, else it does not work. Standardization helps create transparency in the system. It reduces the scope for human errors, manipulation of prices and inventory. Digitization will ensure a speedy completion of tasks.
2. Documentation Management: Documents are a major part of shipping. Maintaining multiple documents and filing them takes up both time and space. Taking the process online will help save on both. In future, it can also help create an integrated documentation platform that can be accessed by all the parties (exporter, importer, shipping lines, ports, banks, storage) involved in the transaction. Thus, paving the way to a paperless system.
3. Door – to – Door Tracking: New technology is making it possible to track containers on a real time basis. This will go a long way in helping customers provide updates to their business partners and plan further logistics.
4. Improved Analytics: Availability of data from all touch points and tools to analyze that data to help make better business decisions is one of the main offerings of advanced technology. Shipping lines can use data collected from various sources to offer better services, plan new trade routes, and allocate space.
5. Better Operational Integration: Transporting a shipment from one location to another involves participation of different modes of transportation and handling at different touch-points. If all of the services can be integrated, it will help provide a seamless experience to the shipper and reduce loss arising out of delays and operational inefficiency for the service providers. It will also help various service providers – ports, road & rail transporters, storage, and shipping lines to plan better and ensure maximum utilization of their space and equipment.
Going digital can help the shipping industry become efficient and reduce cost for certain processes. But, the benefits from these changes can be reaped if the industry as a whole adopts new technology.